#85: Moz Founder Rand Fishkin Reveals the Pains of VC Funding and an Alternative Funding Approach
Mar 15, 2024
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Rand Fishkin, founder of Moz, shares the struggles of VC funding and the shift towards practical funding for his new venture. Discussions on the challenges of big VC funding, work ethic in startups, angel investing, and navigating growth hurdles in the SEO industry. Emphasis on the harsh realities of VC funding, organic audience building, and modern marketing strategies.
Building an audience before product launch is crucial for feedback and validation.
Organic marketing channels are favored over paid advertising for audience growth.
Reflecting on VC funding regrets, Rand Fishkin advocates for practical funding and sustainable profits.
Deep dives
Importance of Building Audience Before Product
Building an audience before launching a product is crucial advice shared by Rand Fishkin. Establishing a community of individuals interested in the problem you're addressing can provide invaluable feedback and validation, setting you up for success.
The Power of Organic Audience Growth
Organic marketing channels are emphasized over paid advertising when it comes to audience growth. Encouraging founders to focus on content, SEO, PR, social media, and community participation can yield a loyal and engaged audience.
Lessons from Moz Funding Choices
Reflecting on Moz's funding choices, Rand Fishkin highlights the regret of raising venture capital in 2012. He believes that the company could have thrived on its operational profits and maintained a leaner structure without the pressures of rapid growth.
Regrets and Learnings on Strategic Decisions
Rand Fishkin expresses regret over not selling to HubSpot and stepping down as CEO. He acknowledges the impact of these decisions on Moz's trajectory. Learning from past strategic moves, he advises founders to carefully evaluate offer opportunities and leadership roles.
Challenges and Nuances of Venture Funding
The pitfalls and pressures associated with venture funding are highlighted by Rand Fishkin. He delves into the nuances of navigating VC dynamics and the all-or-nothing game that founders often find themselves in, urging a more holistic approach to startup growth and sustainability.
Rand Fishkin is the founder and former CEO of Moz, a leading SEO software for marketers created in 2007 that grew out of the active followers of Rand’s popular SEOmoz blog. Moz grew quickly to over $30 million in revenue by 2013, having raised $30 million in venture capital investment. When growth slowed in 2014, the company faced many internal difficulties and Rand dealt with mental health challenges, causing him to step down as CEO.
Rand left Moz in 2018 and later that year published his popular book about his difficult startup journey, “Lost and Founder: A Painfully Honest Field Guide to the Startup World.” He described in detail the growth of Moz and the exciting growth years, but he also revealed the painful challenges he and the company faced in their later years. In this podcast discussion, he is frank about the pitfalls and brutal realities of big VC funding for founders and the companies they created.
Rand created his second software company, SparkToro, in 2018 with an approach that was opposite to the funding, growth, and staffing he used at Moz. We discuss the benefits of practical funding and sustainable profits to create healthy software businesses that support the goals of founders, employees, customers, and investors.